OCTOBER SURPRISE, Part 2

Secret spy deal: U.S., Iran, Israel

A Special Investigative Report
from the Western Journalism Center
with the assistance of the Iran Brief

Editor’s note: As
WorldNetDaily reported yesterday, the Clinton administration is hoping to conclude a “package deal” with the government of Iran in time for the November elections that would resolve 20 years of hostility between the United States and Iran, lead to renewed diplomatic relations, and give President Clinton a much sought-after “legacy” in foreign affairs, according to interviews with intermediaries directly involved in the negotiations and former U.S. officials.

If successful, the deal would restore complete commercial ties between the two countries, allowing U.S. oil companies to invest in Iran and to buy Iranian crude oil while allowing President Clinton and Vice President Gore to claim credit for “resolving” the current oil crisis, all in time for the elections. But for Clinton’s October Surprise to be a success, another key part of the puzzle must fall into place.

WASHINGTON — On June 7, 1999, Tehran Radio announced that the authorities had arrested 13 Jews from the southern provincial capital Shiraz and intended to try them for spying on behalf of Israel. The arrests were immediately condemned worldwide, including in the United States. Assistant Secretary of State Martin Indyk admitted with frustration in congressional testimony the following day that the administration was “having difficulty reconciling President Mohammad Khatami’s conciliatory rhetoric with the arrests of the Jews.”

The 13 Jews were secretly abducted in two waves in January and in March, said the head of the Iranian-American Jewish Federation, Sam Kermanian. But it wasn’t until June that the Iranian government decided to take the issue public. Until then, both the Israelis and Iranian-Jewish leaders in California had been trying to win their release through quiet back-channel negotiations. And Iran had been just as quietly upping the ante for their release.

A few days after their arrest was revealed, Ayatollah Ahmad Jannati, the powerful secretary of the Council of Guardians and a close political ally of Supreme Leader Ali Khamene’i, said the regime would execute the 13 Jews if they were found guilty.

“Where on earth has a spy been allowed to go scot-free,” he asked during a Friday prayer sermon. “The United States itself has arrested spies, and the Americans have not shown any willingness to negotiate over their release. Neither will we.” He then accused the U.S. of practicing a double standard because it continued to hold Israeli spy Jonathan Pollard, despite Israeli efforts to win his release.

The mention of Pollard, a U.S. Navy intelligence analyst arrested in 1985 and jailed for life for passing intelligence secrets to the Israelis, was no accident. Over the next year and a half, Pollard’s fate would become inextricably intertwined with the fate of the 13 Iranian Jews, and more generally, with the course of U.S.-Iranian relations, according to Pollard himself, Iranian intermediaries involved in the negotiations, and former Israeli officials.

Oil and armsEarly reports circulating in Israel and within the Iranian-American Jewish community said at least 23 Jews were arrested during a police roundup on Passover eve that spring. Among the victims were three rabbis, the keeper of a Jewish cemetery, a ritual butcher and a 16-year-old student who was dragged out of his classroom by police.

The chief rabbi of the Sephardi community in Israel, Eliahu Bakhshi-Doron, accused the Iranian government of “trying to get rid of the Jewish community.”

Iran’s Jews numbered between 80,000 to 100,000 at the time of the 1979 revolution. Fearful of the growing fanaticism of Ayatollah Khomeini’s government, Israel negotiated a secret agreement to trade U.S.-made weapons and spare parts in exchange for exit visas for the Jews.

Tens of thousands of Jews fled the country over the next two years, before the program was finally shut down. Iran’s Jewish community is now believed to number a scant 35,000. Despite Israel’s fears, they had not been the victims of obvious religious persecution — until the arrests last year.

In Israel, there was widespread speculation as to the message Iran was sending by arresting the Shirazi Jews.

Some saw the arrests as an attempt to find a face-saving way for returning Ron Arad, an Israeli aviator downed by Lebanese militiamen in 1986 and reportedly “sold” to Iran for arms and cash. (Iran has never admitted to holding Arad). Others speculated that Iran was punishing Israel for refusing to reopen the arms pipeline.

A more credible story was reported by the Israeli daily Ha-aretz, which unearthed contracts dating from the late 1970s when Israel and Shah Mohammad Reza-Pahlavi had developed a secret partnership aimed at countering the growing military strength of Iraq.

Israel owed Iran money — as much as $5 billion, according to some accounts. And the Iranians wanted their money back.

During the late 1960s, the shah helped finance an oil pipeline that ran from Eilat to the Mediterranean port of Ashkelon. The Iran-Israel oil connection became more intense in the mid-1970s, when the shah committed himself to helping Israel get out from under the Arab oil boycott.

But the lion’s share of Israel’s debt to Iran stems from three unfulfilled weapons deals. The joint development projects were first revealed in top-secret transcripts of meetings between the shah’s defense minister, Gen. Hassan Toufanian, his Israeli counterpart, Ezer Weizmann, and Foreign Minister Moshe Dayan.

The transcripts were among the dozens of bags of hastily shredded documents seized by Islamic “students” when they stormed the U.S. Embassy in Tehran in November 1979. Bit by bit, the students reassembled the shredded pages and published them in a 40-odd volume series called “Documents from the U.S. Espionage Den.” The Toufanian-Weizmann transcripts appeared in Volume 19 of the series in the mid-1980s, but have never before attracted much attention.

Toufanian referred to “the six contracts in action now” during their July 18, 1977 meeting, including a $300 million deal to build a Soltam mortar factory in Iran. He also mentioned “things that are not in contracts, for instance, the future fighter.” In the late 1970s, Israel and Iran had been discussing Iranian financing for an indigenous Israeli fighter known as the Aryeh — and later, as the Lavi.

The most ambitious and most advanced project was the Jericho 2, a missile the Israelis designed after receiving a shorter-range version from France in 1962.

Iran and Israel had launched a joint missile project code-named “Tzur.” Under the agreement, Israel designed the missile, while Iran provided the financing — as much as $1 billion, according to an account by Israeli investigative reporter Ronen Bergman that appeared in the Ha’aretz newspaper.

In 1977, Israeli missile experts went to Iran to supervise construction of a missile launch site near Rafsanjan in south-central Iran.

But as the shah’s regime began to fall apart, Israeli ambassador to Iran Uri Lubrani urgently ordered the arms and oil deals scaled back. In July 1978, Israel repatriated all military personnel and defense experts then on assignment on joint projects in Iran, and shipped back technical documents and blueprints via the diplomatic bag.

For several years, the Iranian government has been quietly seeking repayment of Israel’s debt from an international arbitration panel in Geneva and Paris, claiming up to $5 billion. According to Bergman, shortly after becoming foreign minister in 1996, Ariel Sharon ordered a review of the subject and “initiated an unofficial contact with Iran in order to propose that the two countries negotiate the question of the debts.”

Former Israeli officials confirmed in Tel Aviv in late 1997 efforts then under way by Sharon to get Russia to “buy” Israel’s debt to Iran, in exchange for Russia canceling technical support for Iranian long-range missile projects.

Under the plan, Israel would pay Russia the money owed Iran, allowing Russia to pay Iran. Sharon also offered to purchase several billion dollars worth of Russian natural gas if Russia would cut off aid to Iran’s weapons programs, the former officials said.

Both proposals were rejected. The missile Russia helped design for Iran, the Shahab-3, was successfully test-launched July 21, 1998. For the first time ever, the Islamic Republic of Iran now has the capability of launching a first strike against Israel.

The Pollard negotiationsIsraeli Prime Minister Benjamin Netanyahu and Bill Clinton had learned to quietly detest each other. But at a critical juncture of the Wye River plantation negotiations in late October 1998, Clinton balked at a promise he had made earlier, which to Netanyahu was critical — freedom for convicted Israeli spy Jonathan Pollard.

According to Netanyahu’s top aide, Dani Naveh, Clinton had made a solemn promise to release Pollard within hours of announcing an agreement on the Middle East peace talks with Palestinian leader Yasser Arafat. The plan was for Pollard to be brought to Andrews Air Force base in Maryland where Netanyahu’s official plane was waiting, so Netanyahu could return to Israel later that day with Pollard.

Pollard says he was told by federal authorities at his Butner, North Carolina, high security prison earlier that day that he should “pack his bags” for departure.

But at 5 a.m. Oct. 23, 1998, Clinton took Netanyahu aside as the difficult all-night talks were concluding and told him that the deal for Pollard’s freedom was off. Naveh says he watched as Netanyahu “turned white” on hearing the news.

In press accounts that appeared over the ensuing days, the White House denied any deal for Pollard’s freedom had been made and blamed Netanyahu for the eventual failure of the talks. But Naveh and other former Israeli officials confirmed Pollard’s version of the story.

Writing in the Baltimore Sun in July, Naveh confirmed that Clinton had broken his word to free Pollard “at the very last moment.” But he still held out hope.

“The end of Mr. Clinton’s term in office represents a never-to-be-repeated golden opportunity to honor the commitment he made at Wye and to demonstrate true generosity of spirit to the people of Israel,” he wrote in July.

Pollard is a hero to many Israelis because he provided early warning of Saddam Hussein’s chemical weapons program, which the U.S. government refused to share with the Israeli government.

In the United States, Pollard has come in for heavy criticism from the intelligence community and from many members of Congress. But he has become a cause celebre among prominent Jewish organizations and Orthodox rabbis, who have formed public support networks to work for his release.

Two months after Netanyahu’s May 1999 election defeat, Pollard tried a different tack, this time approaching the Iranians directly with the idea of a three-way deal. Unbeknownst to him, he made his pitch precisely at the same time an Iranian-American Jewish organization in Los Angeles was seeking to cut a deal for the release of the Shiraz Jews.

For the U.S. and Iran, there was the prospect of renewed ties and trade. For leaders of the Iranian-American Jewish Federation, there was the satisfaction of helping to free the Iranian Jews and hopes of recovering personal property expropriated during the 1979 revolution. Israel hoped to win some moderation in Iran’s extremist behavior and support for terrorist groups that were killing Jews. Bringing Pollard home was the icing on the cake.

A senior Clinton administration official discussed the broad outlines of the deal with an Iranian emissary, who brought the proposal to Tehran in late July 1999.

According to the emissary, an official in President Khatami’s personal office, known by its acronym, NAHAD, was put in charge of evaluating the proposal. On July 24, he phoned the intermediary in Washington with a favorable response. The official went by the assumed name “Karimi.”

President Khatami was interested in finding a diplomatic way out of the dilemma caused by hard-liners within his own regime, Karimi said. He reminded the intermediary that Khatami had publicly called for releasing the jailed Jews of Shiraz, and had no objection to throwing Pollard into the lot.

Karimi phoned the intermediary in the United States almost daily over the next week to learn more details of the U.S.-Israeli offer. But when he brought the proposed deal before the weekly meeting of Iran’s National Security Council on July 31, it was rejected by Supreme Leader Ali Khamene’i.

Pollard’s wife Esther believes the government of Prime Minister Ehud Barak had no interest in gaining her husband’s freedom, and bitterly recalls her own attempts to make contact with the Iranian mission to the United Nations that summer.

“I was passed on from official to official,” she said, “without ever getting my message across.”

Esther Pollard got the run-around, but the Iranians were listening. In fact, according to insiders involved in the secret U.S. back-channel with Iran over the past decade, they were listening so intently they didn’t want her to notice, for fear word of the negotiations would leak to the public.

And the New York SenateNowhere is Pollard’s freedom a more sensitive issue than in New York, where prominent Jewish leaders have called for his immediate release.

They argue that Pollard was sentenced to life for a crime he was never accused of committing — and they are right. Pollard was indicted for illegally divulging classified documents to a U.S. ally, but at the last minute, the government introduced a still-classified damage assessment written by then Secretary of Defense Caspar Weinberger, which accused him of treason.

President Clinton has twice reviewed Pollard’s case and refused to grant him clemency, at the urging of successive CIA directors. But Hillary Rodham Clinton, now a candidate for the U.S. Senate in New York, has called on the government to reopen his file and make public the charges against him.

Her opponent, Republican New York Rep. Rick Lazio, is also calling for the government to review the Pollard case. Both are vying for the support of the powerful New York Jewish community in November.

Pollard contends that others who have seen the classified file — including Sen. Robert Torricelli of New Jersey — were outraged that it contained no evidence that he committed treason, and that declassifying the government charges will exonerate him.

In response to a Freedom of Information Act request filed last year, the Defense Intelligence Agency released several hundreds pages of previously classified documents on the Pollard case, including damage assessments of every document he was alleged to have supplied to Israel.

A “Summary of Pollard Case Documents” lists a total of 45 “SCI Documents” he gave to Israel, and 109 “Collateral Documents,” which might have been compromised. “SCI” is an abbreviation for “Special Compartmented Information,” one of the highest levels of U.S. government classification.

The prosecution eventually alleged that Pollard directly compromised 51 documents to the Israelis — a far cry from the accounts frequently reported in the press that evoke a 4-by-6-by-10-foot stack of highly classified documents.

According to the DIA assessments, available here for the first time, the vast majority of the reports Pollard gave the Israelis involved information on Soviet intelligence trawlers operating off the coast of Libya and Tunisia.

The Israelis used the information to penetrate Tunisian airspace undetected in 1986 when they conducted a successful commando raid and assassinated PLO Chairman Yasser Arafat’s top deputy Khalil al-Wazir (Abu Jihad).

There is no evidence that Pollard’s compromise of these documents to the Israelis harmed U.S. national security, nor that the Israelis passed the information on to others.

A far more serious charge is that Pollard compromised the National Security Agency’s codebook of foreign signal intelligence frequencies, which Pollard denies. There is no mention of the codebook in the documents released by DIA.

The DIA documents also provide an unusual insight into Israel’s current Prime Minister Ehud Barak. When Pollard was arrested in 1985, Barak was head of Israeli military intelligence and was privy to inside knowledge of Pollard’s spying. Several of the documents mention Barak by name and suggest that he came to Washington in 1986 to provide evidence to U.S. government investigators that resulted in Pollard’s life sentence.

To this day, Pollard believes Barak betrayed him and has no interest in his release.

But if President Clinton fails to win the freedom of the Shirazi Jews, releasing Jonathan Pollard could be the next best thing for cementing electoral support among Jewish voters for Hillary Rodham Clinton in the tight New York Senate race.

Editor’s note:
The Western Journalism Center is a non-profit, tax-exempt organization that sponsors independent investigative reporting projects into government fraud, waste, corruption and abuse. The charity was founded by Joseph Farah, now editor and chief executive officer of WorldNetDaily.com, but is an entirely autonomous company.

If you would like to support more journalism like Kenneth Timmerman’s “October Surprise” series with tax-deductible contributions, you can do so by calling 1-800-952-5595, by writing to the center at P.O. Box 2450, Fair Oaks, CA 95628, or by making your donation
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Kenneth R. Timmerman is a veteran investigative reporter who has published three books on the arms trade and intelligence issues.